INCOME TAX OFFICER (INTERNATIONAL TAXATION) 3(1)(1), MUMBAI V. SONYA ISHWAR JETHMAL, MUMBAI

ITA 6797/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7324 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2014-2015
• Appeal Filed On: 30-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Keywords: Benefit of exemption
• Section: 271(1)(c); 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.6797/M/2017 ASSESSMENT YEAR: 2014-15 ITO (INTERNATIONAL TAXATION) 3(1)(1), ROOM NO.1628, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI - 400021 VS. SONYA ISHWAR JETHMAL, C/O CM GABHAWALA, 42 NANIK NIWAS, 30, DR. D.D. SATHE MARG, GIRGAUM, MUMBAI PAN: ADCPJ 8359A (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI BIREN GABHAWALA, A.R. REVENUE BY : SHRI CHAUDHARY ARUNKUMAR SINGH, D.R . DATE OF HEARING : 10.04.2019 DATE OF PRONOUNCEMENT : 26.04.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 19.09.2017 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2014-15. 2. THE ONLY ISSUE RAISED BY THE REVENUE IS AGAINST THE ORDER OF LD. CIT(A) HOLDING THAT INVESTMENT IN RESIDENTIAL P ROPERTY IN USA WOULD BE ENTITLED TO EXEMPTION UNDER SECTION 54 OF THE ACT. 3. THE FACTS IN BRIEF ARE THAT THE AO DURING THE CO URSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT ASSESSEE HAS S OLD A RESIDENTIAL PROPERTY AT RS.42,24,44,934/- DURING TH E YEAR AND ITA NO.6797/M/2017 SONYA ISHWAR JETHMAL 2 AFTER CLAIMING INDEXATION COST OF RS.4,54,63,469/- A LONG TERM CAPITAL GAIN WAS COMPUTED AT RS.37,69,81,465/-. OU T OF THE SAID LONG TERM CAPITAL GAIN ASSESSEE INVESTED THE C APITAL GAIN IN NEW HOUSE PROPERTY ABROAD I.E. MANHATTAM USA TO THE TUNE OF RS.11,81,76,071/- AND ALSO INVESTED RS.50 LAKHS IN CAPITAL GAIN BONDS WHICH WERE ELIGIBLE FOR DEDUCTION UNDER SECTI ON 54EC OF THE ACT. THE BALANCE IN CAPITAL GAIN OF RS.25,38,0 5,394/- WAS OFFERED FOR TAXATION. ACCORDING TO THE AO, THE ASS ESSEE HAS NOT INVESTED THE CAPITAL GAIN AMOUNT TOWARDS PURCHASE O F NEW ASSETS WITHIN ONE YEAR BEFORE THE DATE OF TRANSFER OR PURCHASE OR CONSTRUCTED THE NEW ASSET WITHIN TWO YEARS AS PER T HE SCHEME OF THE ACT. THE ASSESSEE HAS NOT DEPOSITED THE CAPITA L GAIN IN THE SPECIFIED ACCOUNT BEFORE THE DUE DATE OF FILING THE RETURN. THE AO ALSO REFERRED TO THE DECISION OF ITAT AHMEDABAD BENCH IN THE CASE OF LEENA J. SHAH VS. ACIT (2006) 6 SOT 721 (AHD), WHEREIN IT WAS HELD THAT EXEMPTION IS NOT AVAILABLE FOR A PURCHASE OF PROPERTY ABROAD. ACCORDINGLY, A SHOW C AUSE NOTICE WAS ISSUED WHICH WAS REPLIED BY THE ASSESSEE AND FI NALLY AO ADDED THE CAPITAL GAIN TO THE TUNE OF RS.11,81,76,0 71/- TO THE INCOME OF THE ASSESSEE ON THE GROUND THAT THE INVES TMENT OF CAPITAL GAIN IN THE PROPERTY LOCATED ABROAD IS NOT COVERED BY THE SECTION 54 OF THE ACT. 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) AL LOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER: 3.4. DECISION: I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SUBMIS SIONS MADE BEFORE THE ASSESSING OFFICER AND ALSO SUBMISSIONS MADE DURING THE COURSE OF APPELLATE PROCEEDINGS. IT IS NOW UPHELD BY VARIOUS COURTS/TRI BUNALS THAT INVESTMENT MADE OUTSIDE INDIA AND CLAIMED U/S 54 OF THE I.T. ACT WA S ALLOWABLE BEFORE THE AMENDMENT MADE BY FINANCE ACT W.E.F. 02.04.2015. IT WAS ONLY NOW THAT THE WORD 'IN INDIA 1 HAS BEEN INSERTED IN SEC 54(1). SINCE THE APPELLAN T'S CASE FALLS BEFORE THE ITA NO.6797/M/2017 SONYA ISHWAR JETHMAL 3 AMENDMENT THE APPELLANT WILL GET BENEFIT OF SEC 54. THE APPELLANT HAS CITED VARIOUS CASE LAWS IN SUPPORT OF HIS CLAIM AND THE LATEST CA SE LAW OF HON'BLE ITAT MUMBAI BRANCH 'B' IN CASE OF ITO 3(1) MUMBAI VS NISHANT JA DHAV (ITA NO. 6883/MUM./2014) PRONOUNCED ON 26.04.2017 UPHELD THAT THE CLAIM OF E XEMPTION U/S 54 CANNOT BE DENIED ON THE GROUND THAT THE INVESTMENT IN THE PRO PERTY WAS MADE OUTSIDE INDIA. FOLLOWING THE VERDICT OF JURISDICTIONAL ITAT. I DIR ECT THE AO TO ALLOW THE EXEMPTION CLAIMED BY THE APPELLANT U/S 54. REGARDING SECOND GROUND OF APPEAL REGARDING INITIAT ION OF PENALTY U/S 271(1)(C) OF THE ACT THE SAME STANDS DISMISSED AT T HIS FORUM. 4. IN NUTSHELL, ASSESSEE'S APPEAL IS PARTLY ALLOWED. 5. THE LD. A.R. SUBMITTED BEFORE THE BENCH THAT THE ISSUE OF INVESTMENT OF LONG TERM CAPITAL GAIN IN ASSET ABROA D IS DULY COVERED BY THE DECISION OF HONBLE GUJARAT HIGH COU RT IN THE CASE OF LEENA JUGALKISHOR SHAH VS. ACIT (2016) 72 T AXMAN.COM 185 (GUJARAT) AND ALSO THE DECISION OF THE CO-ORDIN ATE BENCHES OF THE TRIBUNAL IN THE CASE OF ITO INTERNATIONAL TAXAT ION VS. ASHOK KAILASH CHANDRA NIGAM IN ITA NO.8331/M/2011 A.Y. 20 08-09 ORDER DATED 15.09.2016 AND ITO VS. NISHANT LALIT JA DHAV ITA NO.6883/M/2014 A.Y. 2011-12 ORDER DATED 26.04.2017. THE LD. A.R. SUBMITTED THAT SINCE THE ISSUE OF INVESTME NT OF LONG TERM CAPITAL GAIN RESULTING FROM TRANSFER OF RESIDE NTIAL HOUSE IF INVESTED ON PURCHASE OF PROPERTY (RESIDENTIAL HOUSE ABROAD) EVEN THEN THE ASSESSEE IS ENTITLED FOR EXEMPTION UNDER S ECTION 54 OF THE ACT. THE LD. A.R. THEREFORE PRAYED THAT FOLLOW ING THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT AND ALS O THE CO- ORDINATE BENCHES OF THE TRIBUNAL, THE APPEAL OF THE REVENUE MAY KINDLY BE DISMISSED. 6. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE G ROUNDS OF APPEAL AND ORDER OF AO. ITA NO.6797/M/2017 SONYA ISHWAR JETHMAL 4 7. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE ISSUE OF INVESTMENT OF LONG TERM CAPITAL GAIN IN THE PURCHASE OF RESIDENTIAL HOUSE A BROAD IS NOW SQUARELY COVERED BY THE VARIOUS DECISIONS AS REFERR ED TO BY THE LD. A.R. THE HONBLE GUJARAT HIGH COURT IN THE CAS E OF LEENA J. SHAH VS. ACIT (SUPRA) HAS HELD THAT THE CAPITAL GAI N RESULTING FROM SALE OF LAND IN INDIA IF INVESTED IN RESIDENTI AL HOUSE IN USA THE BENEFIT OF EXEMPTION OF SECTION 54F WOULD BE AV AILABLE AS THERE WAS NO CONDITION IN SECTION 54F BEFORE AMENDM ENT BY FINANCE (NO.2) ACT, 2014 WHICH CAME INTO EFFECT W.E .F. 01.04.2015 AND THEREFORE THE BENEFIT OF SECTION 54F WOULD BE AVAILABLE TO THE ASSESSEE IN ASSESSMENT YEAR. IN T HE CASE OF ITO VS. NISHANT LALIT JADHAV (SUPRA) IT WAS HELD THAT A MENDMENT IN SECTION 54 OF THE ACT BY FINANCE ACT, 2014 IS APPLI CABLE FROM ASSESSMENT YEAR 2015-16 AND THEREFORE ANY CAPITAL G AIN RESULTING FROM SALE OF RESIDENTIAL HOUSE WOULD BE E LIGIBLE FOR EXEMPTION UNDER SECTION 54 OF THE ACT. THE SIMILAR VIEW HAS BEEN TAKEN BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ITO INTERNATIONAL TAXATION VS. ASHOK KAILASH CHA NDRA NIGAM (SUPRA). SINCE THE CASE OF THE ASSESSEE IS SQUAREL Y COVERED BY THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COU RT AND TWO CO-ORDINATE BENCHES OF THE TRIBUNAL (SUPRA), WE, TH EREFORE, RESPECTFULLY FOLLOWING THE SAME DISMISS THE APPEAL OF THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON 26.04.2019. SD/- SD/- (MAHAVIR SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 26.04.2019. * KISHORE, SR. P.S. ITA NO.6797/M/2017 SONYA ISHWAR JETHMAL 5 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.